RPSM09104530 - Technical Pages: Member benefits: Lump sums: Pension commencement lump sum: Maximum amount: Available portion: Establishing the available portion where the member has an enhanced lifetime allowance

If the entitlement arose on or after 6 April 2011 you should first read the guidance at RPSM09104195 

Establishing the available portion of the member’s lump sum allowance where the member is entitled to an enhanced lifetime allowance

[Para 2(5) to (8), Sch 29] [s217][Regs 13 and 14 The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567] 

Where the member is entitled to an enhanced lifetime allowance the available portion of the member’s lump sum allowance is more difficult to ascertain, because it will not be the same as the member’s available lifetime allowance.

For example, a member with a lifetime allowance enhancement factor of 0.5 will have an actual lifetime allowance of 150% of the standard lifetime allowance. If that individual has previously crystallised benefits equal to 80% of the standard lifetime allowance they will have an available lifetime allowance of 70% of the standard lifetime allowance (150% - 80%). But their available lump sum allowance will be only 20% of the standard lifetime (100% - 80%).

However, the available portion of the member’s lump sum allowance can still be calculated based on information the member will have to hand.

Where the member has crystallised benefits previously under another registered pension scheme they will have been provided with a statement confirming the total amount that has crystallised for lifetime allowance purposes for that, and earlier, tax years, under that scheme (see RPSM11103320). Unless no pension is in payment under the scheme, the administrator will provide the member with such a statement every tax year.

The total crystallised amount quoted on the statement will be expressed as a percentage of the standard lifetime allowance. The information on these statements can be easily used to calculate the individual’s available portion of the member’s lump sum allowance, as well as the individual’s available lifetime allowance. The example on RPSM09104560 explains how this can be done.